Cedric Stephens | Hosting display ads on private autos

QUESTION: I own a 2015 Suzuki Vitara. It is insured under a comprehensive private car policy with a New Kingston company. One of my friends, a business owner, has asked me to use my vehicle to advertise his company's products and services. He will pay for the branding costs and pay me a monthly fee. Would this type of arrangement affect my insurance?

- W. N., Portmore, St Catherine

INSURANCE HELPLINE: Your question stumped me. While in the process of conducting research, I learnt two new things. One was about logo liability which I believe as a non-lawyer is not relevant to our legal situation. The other is that your friend's idea is a valid way to earn extra money, which has been around in North America for many years.

It appears from my observations that the branding of motor vehicles, and even the clothing of employees, has now taken a firm hold on our society. Even though local insurers have noticed the trend, I am unsure if they have considered its effects in relation to the protection that they offer consumers like you.

Business use

My short, quick answer to your question is that if you entered a deal with your friend, it could have negative effects on your motor insurance. While policy terms vary between insurers, if you place an advertisement, lettering, magnetic sign or any form of branding on your vehicle in exchange for a fee, your insurer could argue that the vehicle was being used for business. Motor policies in Jamaica typically provide

coverage when the vehicle is used for "social, domestic and pleasure purposes and in connection with the policyholder's business".

Insurers' intention, I believe, is to provide protection as required by law for the policyholder's personal business and exclude general business use. The way around this is to check with your insurer before entering into the agreement and see if they would want to charge you an extra premium for providing the wider coverage.

Insurers are in the business of managing risks. Because of this, they think about risks in ways that are very different from you. Many persons are unaware of this simple fact which is often at the centre of consumer-insurer disputes. Keven Moore, a risk consultant with 25-plus years' experience, understands this. Writing in the Northern Kentucky Tribune, in the context of company-owned vehicles, he argued that there were two schools of thoughts when it comes to making a decision to add graphics, wraps, decals and signage.

Can increase liability

Some persons, he said, are hesitant to use vehicle branding because it can increase liability in the event of an accident, and that adding "these moving billboards to vehicles" increases the likelihood of costly litigation, which in turn "is likely to increase insurance premiums".

Other business owners, he says, realise that branded vehicles "drive past thousands of persons who could become customers, prospects, vendors and/or investors. Unmarked vehicles without branding will pass unnoticed, resulting in missed opportunities".

Your friend falls into the latter group.

He also shared other important pieces of information that offer some additional clues into how insurers think about the subject:

- Branded vehicles may be at a higher risk of vandalism and those that carry valuables, such as tools, may have a higher exposure due to losses from theft;

- Drivers of vehicular billboards are likely to influence the public's perceptions of the brands either positively or negatively by the way that they drive; and

- These types of vehicles are likely to become targets for staged accidents.

I have seen no data to suggest that branded vehicles are more accident-prone than other kinds of vehicles or trigger higher insurance payouts than unbranded vehicles.

Finally, and on another subject: I note from last Friday's Financial Gleaner that the Financial Services Commission's executive director, Everton McFarlane, has reacted to last week's article - 'Finally, insurance reform with upsides for consumers'.

He has not, however, raised issues about the accuracy of the facts in the article. He explained, perhaps more clearly than I did, that the commission's work often involves striking a balance between market conduct and solvency regulation.

In my opinion, the commission has, in the past, tended to emphasise the latter and ignore the former.

Mr McFarlane and I are involved in two different arguments about autonomy. He uses the term "significant autonomy" to describe the present. My focus is on the future. I believe that it would be of benefit to all of the stakeholders if the FSC had the same level of autonomy that is now being envisioned for the central bank. Haven't we learnt anything from the past?